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F I S C A L I M P A C T R E P O R T

SPONSOR Komadina

ORIGINAL DATE

LAST UPDATED

02/12/06

HB

SHORT TITLE Public School Employee Uniform Contributions

SB 92

ANALYST Geisler

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY06

FY07

FY08 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$10,184.1*

(employer)

$13,513.3

(employer)

$23,697.4

(employer)

Recurring General Fund

(APS)

Total

$28,276.0*

(employer) $14,891.0

(employer) $43,167.0

(employer)

Recurring General Fund

(NMPSIA)

(Parenthesis ( ) Indicate Expenditure Decreases)

*Pro-rated to assume partial year implementation, see fiscal impact.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Albuquerque Public Schools (APS)

New Mexico Public Insurance Authority (NMPSIA)

SUMMARY

Synopsis of Bill

Senate Bill 92 changes the state contribution percentage towards group insurance for member

school districts, charter schools, and other educational entities participating in the Public School

Insurance Authority to 80%. It also changes the contribution to 80% for school districts in ex-

cess of 60,000 students who do not participate in NMPSIA (currently Albuquerque Public

Schools).

There is no appropriation contained in the bill.

Senate Bill 92 – Page

2

FISCAL IMPLICATIONS

As shown above, the combined fiscal impact for the increased employer share of benefits on

APS & NMPSIA for FY 07 is a recurring cost of $38.4 million. This is a partial year impact

which assumes the bill will be amended to implement on October 1

st

for NMPSIA and December

1

st

for APS.

For FY08, the additional increment to annualize the full fiscal year cost of the higher brackets is

$28.4 million.

The APS and NMPSIA estimates reflect additional enrollment projected from employees that

take advantage of less costly employee share for benefits—3 percent growth in the case of

NMPSIA and 10 percent growth in the case of APS.

Because of the higher employer share of the benefits cost, employee take home pay would in-

crease. PSIA provided the chart below to illustrate the differences in employee’s payroll deduc-

tions for medical insurance under the current versus proposed brackets. As shown below, an

employee earning $22,000 a year would save $142 per month on BCBS family coverage, or

$1,704 per year.

(Assumes High Option Blue

Cross Plan)

Employee’s Monthly De-

duction for Medical – Cur-

rent Brackets

Employee’s Monthly De-

duction for Medical – Pro-

posed 80%

Employee earning $10,000 $93 single; $236 family $74 single; $189 family

Employee earning $18,000 $112 single; $283 family $74 single; $189 family

Employee earning $22,000 $130 single; $331 family $74 single; $189 family

Employee earning $40,000 $149 single; $378 family $74 single; $189 family

APS provided the following chart to illustrate the difference in employee’s payroll deductions

for medical insurance under the current versus proposed brackets. As shown below, an em-

ployee earning $22,000 per year would save $141 per month on Presbyterian family coverage, or

$1,692 per year.

(Assumes APS High Option

Presbyterian Plan)

Employee’s Monthly Deduc-

tion for Medical – Current

Brackets

Employee’s Monthly Deduc-

tion for Medical – Proposed

80%

Employee earning $10,000 $ 87.03 single; $235.02 family $69.62 single; $188.02 family

Employee earning $18,000 $104.43 single; $282.03 family $69.62 single; $188.02 family

Employee earning $22,000 $121.84 single; $329.03 family $69.62 single; $188.02 family

Employee earning $40,000 $139.25 single; $376.04 family $69.62 single; $188.02 family

SIGNIFICANT ISSUES

There is no appropriation contained in the bill. In the 2004 session, APS and PSIA members

were given authority to increase their contributions up to 80%, “within available revenues”. No

appropriation was given in 2004. To date, only three PSIA participating made slight increases in

their group insurance contribution.

Senate Bill 92 – Page

3

ADMINISTRATIVE IMPLICATIONS

Growth in covered lives will likely occur. PSIA and APS would need to consider a special en-

rollment for those who previously declined coverage.

The effective date of the legislation is July 1, 2006. School districts cut their summer payroll

checks in May. It would be a huge administrative burden for each school district/entity to

change the deductions for the summer checks, and then change deductions again when the Octo-

ber 1 premium changes take effect for PSIA and the December 1 premium changes for APS. See

suggested amendment below.

It would be much simpler for the district payroll personnel not to have to refigure the employer

match whenever there an employee has a salary change.

RELATIONSHIP

House Bill 867 also amends the employer share of employee benefit costs, but also proposes

having NMPSIA handle employee benefits for APS.

AMENDMENTS

Insert October 1, 2006 as an effective date for NMPSIA and December 1, 2006 as an effective

date for APS.

For clarification, page four, line 11 – suggest changing language to “coverages, including any

dependent coverage elected”.

Page five, paragraph “I”. Suggest deleting this paragraph as this “permits” up to 80%, which

conflicts with the proposed mandatory 80% contribution.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Continued erosion of educational employees’ take home pay due to insurance premium in-

creases.

GG/nt